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need2know: Defensive start to week

Local stocks are poised to open little changed with investors in a defensive mode ahead of key earnings as well as this week's US central bank policy meeting.

What you need2know:

• SPI futures down 8 points to 5522 on Saturday morning

• AUD at 93.99 US cents, 95.69 japanese yen, 69.97 Euro cents and 55.37 British pence.

• On Wall St, S&P 500 -0.5%, Dow -0.7%, Nasdaq -0.5%

• In Europe, Euro Stoxx 50 -1.4%, FTSE -0.4%, CAC -1.8%, DAX -1.5%

• Spot gold up 1% to $US1307.15 an ounce.

• Brent oil rises 1.2% to $US108.39 per barrel.

• Iron ore adds 0.7% to $US94.30 per metric tonne.

What's on today

Leighton Holding reports earnings, Navitas also reports earnings.

Key international events later this week

US Federal Reserve policymakers meet on Tuesday and Wednesday in Washington. On Friday the US government will release its July nonfarm payrolls report.

Also on Friday, China will release July's purchasing managers index.

Stocks to watch

Goldman Sachs downgraded its global equities allocation to neutral on a short-term basis on Friday, even though the brokerage remains overweight stocks for the longer term.

CitiBank has trimmed its forecast for the ASX 200, identifying slowing economic growth and a tightening of US monetary policy as the main threats to the market.

Credit Suisse has lowered its recommendation on Nufarm to "neutral" from outperform and has trimmed its target price by 10 cents to $4.90.

UBS has a "buy" on BHP Billiton with a $42.00 a share target price. The broker said the big miner had a "cracking quarter with iron ore and coal the standouts".

Currencies

The US dollar hit an eight-month high against the euro on Friday after weak data on German business sentiment heightened concerns that geopolitical tensions were weighing on the euro zone economy.

This week's focus will be the Federal Reserve policy meeting. "There is a chance of a bit more hawkish tone to the Fed's statement," said Richard Scalone of TJM Brokerage, in light of recent strong US jobs growth.

Commodities

Benchmark London Metal Exchange copper dipped ahead of the weekend after news that supply could improve with Indonesia potentially exempting some shipments of concentrate from its export ban.

Freeport-McMoRan has clinched a deal with the Indonesian government allowing the miner to resume copper concentrate exports from the country, effectively ending a six-month tax dispute.

The price of iron hit a one-month low last week, but analysts who spoke to The Australian Financial Review are divided on whether supply and demand will rebalance, or a long-term glut is forming as Australian and Brazilian mining groups ramp up production.

United States

US stocks closed lower on Friday in a broad consumer discretionary-led selloff after Visa and Amazon, a pair of closely watched bellwether names, reported disappointing results. Only two of the 10 primary S&P 500 industry sectors were positive on the day.

Amazon.com tumbled 9.6 per cent to $US324.01 as the biggest drag on the S&P 500 after reporting an unexpectedly big second-quarter loss due to greater expenses on investments.

US gross domestic product for the second quarter, due to be released on Wednesday in Washington, is forecast to have grown 3.2 per cent. Growth had shrunk 2.9 per cent in the first quarter due to a harsh winter and spending cuts tied to the federal Affordable Care Act. Still, some lackluster recent data on housing and capital spending, plus a mixed bag of second-quarter earnings, have raised the risk thateven a moderate GDP bounce may fall short of expectations.

Europe

Germany's Ifo business climate index, based on a monthly survey of some 7000 firms, fell to 108.0 in July, marking a third consecutive monthly decline and missing estimates of 109.4, according to a Reuterspoll of economists.

Shares in BSkyB tumbled 5.46 per cent in London after the British satellite television group said it had agreed multi-billion-dollar deals with Rupert Murdoch's media empire 21st Century Fox to create a pan-European pay-TV giant.

Royal Bank of Scotland surged 11.31 per cent, easily topping London's FTSE 100 index before ending the day up 10.77 per cent after the state-rescued lender announced a surge in profits.

What happened on Friday

A seven-session rally for the Australian equity market ended with a modest dip on Friday.

The S&P/ASX 200 Index added 0.9 per cent over the week to close at 5583.5 points, while the broader All Ordinaries Index gained 1 per cent to 5574.2 points as the index flirts with 5600 points for the first time since June 2008.

On Friday, the local market edged down 0.1 per cent after the spot price of the country's biggest export, iron ore, slid for the sixth consecutive day to $US93.60 per tonne.